Singapore industrial production weakened sharply in December, with output decreasing 0.7 percent on the month after increasing 1.7 percent in November. Previously published trade data also showed subdued growth in exports in December, while PMI survey data showed growth in the aggregate economy slowed sharply in December. Officials at the Monetary Authority of Singapore today announced they would target more moderate and gradual exchange rate appreciation.

In year-over-year terms, industrial production rose 10.6 percent in December after increasing 10.8 percent in November. Growth remained strong but slowed in the electronics industry, which accounts for nearly half of the sector, with output there increasing 14.3 percent on the year after advancing 31.3 percent previously. Offsetting this move, output growth improved in year-on-year terms in the precision engineering, chemicals, transport engineering, and general manufacturing industries. Growth also rebounded in the volatile biomedical industry. Excluding the biomedical industry, output advanced 10.6 percent on the year in December after increasing 16.0 percent in November.

The consensus looks for output down 1.2 percent on the month and up 5.0 percent on the year.

The industrial production index measures changes in the volume of industrial production with respect to the base year. The index charts the growth in production of each major industry and of the manufacturing sector. Industrial Production measures the physical output of the nation's factories, mines and utilities. Factories manufacture various products, and the industrial production indexes have been prepared as a comprehensive indicator of wide-ranging production activities for such products and are regarded as some of the most important among economic indexes.

Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that won't lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios.

Industrial production provides key industry data for export-dependent economies. It is highly sensitive to the business cycle and can often predict future changes in employment, earnings and income. For these reasons industrial production is considered a reliable leading indicator that conveys information about the overall health of the economy. This report has a big influence on market behavior. In any given month, one can see whether capital goods or consumer goods are growing more rapidly. Detailed data in the report shows which sectors of the economy are growing and which are not.